Kings of Repeat E-Business

By Lou Hirsh & Jennifer LeClaire
Aug 26, 2002 4:48 PM PT

Early adopters of e-commerce spent millions trying to draw online shoppers through their
virtual doors. Many were able to generate traffic. Some even generated revenue. But only
a handful attracted the coveted repeat customers that mark a successful
e-business.

Indeed, the majority of early online vendors fell victim to the massive e-tail shakeout
that witnessed the crash and burn of some promising upstarts.

Today, e-commerce sites looking to turn browsing visitors into repeat buyers must move
well beyond the basics of design, pricing and good salesmanship. In a competitive
environment, companies must also go the extra mile to make the purchase experience
convenient and stress-free for their time-strapped customers.

"Satisfied shoppers spend more, they tell their friends, and they are more likely to
return," GartnerG2 research director
Brian Smith told the E-Commerce Times.

And according to Steve Telleen, vice president of the ScoreCard service at
Giga Information Group, the best sites
use a mix of crucial ingredients to generate repeat business. They provide tools and
personalization features that are easy
to find and use, they speed the purchase process by not making customers enter
information multiple times, and they offer a sense of community.

Cultivating Loyalty

Companies that offer highly personalized services, incentive-based programs and
multichannel options -- all designed to make the purchase experience easier and more
valuable for consumers -- are proving that first-time buyers can be converted to
frequent purchasers.

A good example is clothing retailer
Lands' End, whose site offers a feature
called "My Virtual Model," a mannequin that users can set to their own measurements to
see how clothing items fit. Visitors can store their virtual model on the
site and then access it during future visits.

Telleen said that the more a company works to give customers exactly what suits them,
the higher the chance that they will return to buy again. "You can find what
you're looking for very easily on [the Lands' End] site," he told the
E-Commerce Times.

Lands' End also creates a sense of community that keeps customers coming back. For
instance, the company regularly puts out an e-mail newsletter geared toward rural
lifestyle issues. The newsletter -- unlike the majority of mailing list publications
produced by online retailers -- is strikingly free of sales pitches.

Doing well in e-commerce requires a combination of information gathering and
technology -- both of which are crucial
to effective personalization -- that leads to repeat purchases. But not all sites can
afford the personalization technologies that have helped propel companies like
Lands' End, eBay and
Amazon.com to the top.

Color Me Personal

Experts agreed that Amazon has long been a leader in terms of features that encourage
repeat business. For example, the company not only introduced one-click shopping, but
also lets customers choose among multiple credit card numbers that can be stored for
various purchases.

"Amazon.com is the king of understanding what it takes to get customers to come back and
buy again," Giga Information Group analyst Rob Enderle told the E-Commerce Times. Many
other companies have adopted strategies first refined by Amazon, such as "smart"
recommendation engines and communities of reviewers focused on specific books or
products. However, while Barnes & Noble
and Buy.com have attempted to mimic the
Amazon model, Enderle said, they do not perform at the same level.

1-800-Flowers.com is another example of
a company whose personalization options stand above the usual fare. The site lets
customers store not only credit card data, but also multiple names and addresses of
frequent recipients -- which can be a big time-saver for special occasions. After buyers
log in and purchase flowers, they also can choose who on their preset list will
receive them.

Other firms mastering the art of personalized repeat business include those offering
products that customers must buy frequently.
Forrester research director Kate
Delhagen said these companies include office supply vendors like
Staples and
Office Depot, both of which have site
features that get buyers though the checkout process in minimal time.

Breadth and Depth

According to GartnerG2's Smith, eBay also belongs among the top ranks of repeat business
generators because it combines a breadth of different products with a wide selection
within each category, and it does an excellent job of building and maintaining a
community.

Financially, the auction site is among the Web's biggest success stories, and it is
no coincidence that eBay also has a high level of repeat visitors who spend a lot of
time on the site. For example, Smith said, 55 percent of eBay's 19 million unique
visitors in June were repeat visitors. The average visitor stops by the site 7.5
times per month and spends nearly two hours on eBay each time.

Another way to enhance breadth and depth is the multichannel approach, which typically
entails providing offline services in addition to a commerce-enabled site. E-tailers with
brick-and-mortar strategies -- or even catalog outlets -- are gaining
customer loyalty more quickly than
Web-only retailers, according to analysts.

"Having that connection in the offline world can be a forum for bringing customers to
the online site and converting those offline viewers into online purchasers," said Dawn
Brozek, an analyst at Nielsen//NetRatings.

First Impressions

While most companies closely guard figures that document how many of their site visitors
actually become buyers, Smith said, a company that keeps buyers coming back will
increase its chances of making sales over the long term.

This is true, of course, only if a user's experience has been positive, so first
impressions are crucial. Smith said a company cuts its chances of winning repeat
business if a first-time visitor finds a site too slow to use or too hard to navigate.

Forrester's Delhagen noted that various industries must use different barometers to gauge
the effectiveness of their repeat business initiatives.

For example, an online grocer needs to draw about 26 annual purchase visits from the
average customer to be successful, while an online clothing seller needs only two or
three paying visits per year.